Tamari v. Bache & Co. (Lebanon) S.A.L.

• Decision Date: 27 February 1984
• Docket Number: No. 83-1950,83-1950
• Citation: 729 F.2d 469
• Parties: Abdallah W. TAMARI, Ludwig W. Tamari, Farah Tamari, Co-partners d/b/a Wahbe Tamari & Sons Co., Plaintiffs, v. BACHE & CO. (LEBANON) S.A.L., a Lebanese corporation, Defendant-Appellee. Appeal of Robert P. HOWINGTON, Jr., et al.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 469

729 F.2d 469

Abdallah W. TAMARI, Ludwig W. Tamari, Farah Tamari, Co-partners d/b/a Wahbe Tamari & Sons Co., Plaintiffs, v. BACHE & CO. (LEBANON) S.A.L., a Lebanese corporation,

Defendant-Appellee.

Appeal of Robert P. HOWINGTON, Jr., et al.

No. 83-1950.

United States Court of Appeals, Seventh Circuit.

Argued Jan. 18, 1984.

Decided Feb. 27, 1984.

John W. Hough, Howington, Elworth, Osswald & Hough, Chicago, Ill., for plaintiffs.

James W. Collins, Boodell, Sears, Sugrue, Giambalvo & Crowley, Chicago, Ill., for defendant-appellee.

Before BAUER and FLAUM, Circuit Judges, and SWYGERT, Senior Circuit Judge.

BAUER, Circuit Judge.

Plaintiffs' former counsel, the law firm of Howington, Elworth, Osswald & Hough (the Firm), appeals from the district court's order that held it and the plaintiffs jointly liable for certain costs and fees incurred by the defendant Bache & Co. (Lebanon) S.A.L. (Bache). Because the Firm is no longer involved in the litigation between the plaintiffs (Tamaris) and Bache, the Firm is contesting only the assessment of fees and costs against the Firm itself. Upon careful examination of the record, we affirm the district court's order.

I. BACKGROUND

This appeal concerns a single episode in a case with a protracted history. In December 1975, the Tamaris filed an action against Bache alleging that Bache defrauded them of more than two million dollars in violation of Sections 4b and 4c of the Commodity Exchange Act, 7 U.S.C. Secs. 6b & 6c (1983). Discovery in the case has taken several years. The district court ordered the Tamaris and the Firm to pay the fees and costs at issue here on the ground that the Tamaris disobeyed the court's discovery orders.

The district court's order was the culmination of a series of events surrounding Bache's attempts to depose the Tamaris. On June 24, 1982, the district court ordered the parties jointly to present a deposition schedule to the court on September 16, 1982. R. 25. At the September 16 status hearing, the parties offered a proposed schedule under which the three Tamari brothers would be deposed by October 12, 1982. The Firm told the court: "[W]e have got a tentative schedule .... My clients, the Tamaris, would be deposed in October. We still have to confirm the exact dates with them and I also have to check on their availability to come to Chicago at that time." R. 62, at 5. The court remarked that, in the absence of "something very dramatic," the Tamaris' depositions should be completed by the end of October 1982. Id. at 46. The court's minute order that day stated that "[p]laintiffs [sic] depositions are to be completed by October 27, 1982." R. 27. The October 27 deadline also appeared in two letters, dated October 7 and October 13, that Bache's attorneys sent to the Firm. R. 31, Exhibits E & F. On September 20, the court entered an order granting Bache's motion to compel the Tamaris to produce certain documents at least five days before their depositions. R. 29.

At the October 27 status hearing, the court granted Bache's motion to dismiss on the ground that the Tamaris had not appeared for their depositions and had not complied with the court's order to produce the documents. R. 32, at 63. The Firm attempted to justify the Tamaris' failure to appear by stating only that the Tamaris were busy. The Firm did not request an evidentiary hearing or an opportunity to file a response to Bache's motion to dismiss.

On November 1, 1982, the Tamaris filed a motion to vacate the dismissal order on the grounds that the Firm had not regarded October 27 as a deadline and that most of the documents that the court ordered them to produce had been destroyed. R. 34. Before ruling directly on the motion, the court ordered Bache's attorneys to depose the oldest Tamari brother, Abdallah, to determine whether the Tamaris had been aware of the deposition and discovery deadlines. R. 35. Abdallah Tamari was deposed on November 2. On February 7, 1983, the district court granted the Tamaris' motion to vacate on the ground that the Tamaris "were not informed by their counsel of the October 27 deposition cut-off date .... [C]ounsel inaccurately conveyed to his clients the substance of the court's order." R. 39, at 2.

Bache filed a motion on March 7, 1983, for expenses it incurred as a result of the Tamaris' failure to meet the October 27 deadline. R. 43. The expenses included attorneys' fees and costs for taking Abdallah Tamari's deposition and for submitting a motion in opposition to the Tamaris' motion to vacate. Both parties fully briefed the motion, R. 50 and 54, and neither party requested an evidentiary hearing. The Tamaris, who are Lebanese citizens, contended in their brief that the war in Beirut, Lebanon, justified their failure to appear for their depositions in October and made it impossible to produce the requested documents. On May 11, 1983, the court granted Bache's motion for fees and costs under Federal Rule of Civil Procedure 37. R. 59. The court found the Tamaris' arguments "unpersuasive" because "[n]one of the three plaintiffs were in Beirut at the relevant times" and because any difficulty in obtaining the requested documents "could be handled in some way other than a simple failure to agree to deposition dates. There is no indication that plaintiffs seriously discussed these particular problems with defendant." R. 59, at 1-2. The court ruled that the expenses requested were reasonable and assessed the fees and costs jointly against the Tamaris and the Firm.

II. RULE 37(B) SANCTIONS

Federal Rule of Civil Procedure 37(b) provides that a court may impose various sanctions on a party or his attorney who fail to comply with a court order. Rule 37(b) states, in part, that a court "shall require the party failing to obey the order or the attorney advising him or both to pay the reasonable expenses, including attorney's fees, caused by the failure, unless the court finds that the failure was substantially justified or that other circumstances make an award of expenses unjust." Fed.R.Civ.P. 37(b). The sanctions outlined in Rule 37 provide a district court with valuable tools for preventing the parties to a lawsuit from "unjustifiably resisting discovery." Fed.R.Civ.P. 37 advisory committee note. The district court has broad discretion in imposing sanctions, and thus we will overturn a district court's sanctions only where the court has abused its discretion. See, e.g., National Hockey League v. Metro Hockey Club, 427 U.S. 639, 642, 96 S.Ct. 2778, 2780, 49 L.Ed.2d 747 (1976); Hindmon v. National-Ben Franklin Life Insurance Co., 677 F.2d 617, 620 (7th Cir.1982). We find that the district court did not abuse its discretion here.

A. The Requirement of a Court Order

The Firm argues that although Rule 37(b) gives a court authority to impose sanctions when a party fails to comply with a court "order," a party seeking Rule 37(b) sanctions first must file a motion to compel discovery. The Firm further contends that only after the court has ordered compliance with the motion to compel, and the other party fails to comply, may the court properly impose sanctions. See 4A J. Moore, J. Lucas, & D. Epstein, Moore's Federal Practice p 37.03[2.1] (2d ed. 1983). The Firm concludes that because Bache did not file a motion to compel, the district court could not use Rule 37 to impose sanctions upon it. ¹

The Firm misconstrues the Rule 37 order requirement. Although a motion to compel usually precedes the imposition of Rule 37(b) sanctions, a formal motion is not always necessary. In general, where a party has received adequate notice that certain discovery proceedings are to occur by a specific date, and that party fails to comply, a court may impose sanctions without a formal motion to compel the discovery from the opposing party. For example, in Properties International, Ltd. v. Turner, 706 F.2d 308, 310 (11th Cir.1983), the court affirmed a district court's imposition of sanctions on the ground that the lower court's order that defendants provide the government "with complete discovery" was sufficient under Rule 37(b), since there is "no requirement that the opposing party move for [the Rule 37(b) ] order." Similarly, in Charter House Insurance Brokers, Ltd. v. New Hampshire Insurance Co., 667 F.2d 600, 604 (7th Cir.1981), this court stated that an attorney's promise in open court to produce certain documents "could be treated as the equivalent of an order" for Rule 37(b) purposes. See also Henry v. Sneiders, 490 F.2d 315, 318 (9th Cir.), cert. denied, 419 U.S. 832, 95 S.Ct. 55, 42 L.Ed.2d 57 (1974) (Rule 37(b) sanction upheld where district court orally had ordered defendant to produce records, since "[w]here oral proceedings unequivocally give a litigant notice that certain documents are to be produced, the absence of a written order does not preclude the entry of a default judgment for failure to comply."); Jones v. Uris Sales Corp., 373 F.2d 644, 646-47 (2d Cir.1967) (proceedings in judge's chambers, where judge announced that he would give counsel twenty-four hours to produce subpoenaed documents, treated as oral motion and order).

The Firm here received notice on numerous occasions that the depositions were to be completed by October 27, 1982. First, at the September 16, 1982, status hearing, the court told the parties that, in the absence of "something very dramatic," the Tamaris' depositions should be completed by the end of October 1982. Second, the court's minute order that day directed that the Tamaris' depositions be completed by October 27, 1982, the date of the next status hearing. The Firm admits that it received a copy of the minute order. Third, the court ordered the attorneys in chambers to complete the Tamaris' depositions by October 27. The court alluded to this conversation at the status hearing on October 27, during the following colloquy with one of the Firm's attorneys, Mr. Stephens:

THE COURT: No, I'm predisposed to dismissing this...